Single-payer could cost California more than twice the state budget

May 23, 2017

A plan to create a single-payer healthcare system that is currently under consideration in the California Legislature would cost $400 billion annually to implement, according to a legislative analysis released by the Senate Appropriations Committee on Monday. By comparison, California’s proposed budget for the upcoming fiscal year is approximately $180 billion.

In order to cover healthcare and administrative costs, California could redirect $200 billion of existing federal, state and local funds toward the single-payer system. However, the state would need to raise another $200 billion from tax hikes, according to the analysis.

SB 562, a bill introduced by state senators Ricardo Lara (D-Bell Gardens) and Toni Atkins (D-San Diego), calls for creating a Medicare-style health system for all California residents, including illegal immigrants. If adopted, California would become the first state in the country to institute a single-payer system.

Under the proposal, private insurers would be replaced with a state agency that would function as an insurance company, paying doctors and hospitals when people seek treatment. Residents who currently receive insurance through employers would received coverage through the state.

The legislative analysis states the single-payer proposal would likely reduce spending by employers and employees statewide, which currently ranges from $100 billion to $150 billion a year. However, the analysis says there is tremendous uncertainty about how the single-payer healthcare system would function.

“This bill would require unprecedented changes to a mature healthcare system,” the legislative analysis states.“Therefore, there is tremendous uncertainty in how such a system would be developed, how the transition to the new system would occur and how participants in the new system would behave.”

At the California Democratic Party convention over the weekend, the issue of single-payer healthcare received considerable attention. Progressives, including hundreds of nurses, railed for a single-payer system, while some party officials expressed doubt over whether the state would be able to fund the plan.

Last month, SB 562 passed the Senate Health Committee on a 5-2 vote. State Sen. Bill Monning, who represents San Luis Obispo County, cast one of the votes in favor of the single-payer bill.

On Monday, the Senate Appropriations Committee voted unanimously to place the bill in its suspended legislation file.